On May 5, the UK’s Financial Conduct Authority (FCA) published a notice on its updated position limits for certain commodity derivative contracts traded on UK trading venues (the Statement).
In the Notice, the FCA has amended various position limits by removing the 2,500 de-minimis limit (the Limit) to reflect the changing market conditions. The FCA deemed that a 2,500 lot limit could impair market functioning or growth in the relevant contracts in ways which MiFID II sought to avoid.
The changes immediately apply to the following contracts:
- Aluminium Monthly Average Futures (OA);
- Steel Rebar (SR);
- Hot Rolled Coiled China Steel (HC); and
- Hot Rolled Coil North America (HU).
The FCA will replace the Limit with an announcement in due course, which may be subject to change depending on the outcome of ESMA’s opinion on the Limit. The FCA will provide two months’ notice before the new limits come into force.
The Notice is available here.